As Nirmala Sitharaman cracks down on illegal apps, the RBI will create a whitelist of legitimate loan applications.

Following a meeting presided over by finance minister Nirmala Sitharaman the day before, the Reserve Bank of India is scheduled to create a "Whitelist" of all the legal lending apps, the government announced on Friday. According to a statement from the finance ministry on Friday, September 9, the minister presided over a meeting to review a number of issues relating to loan applications that are illegal outside of the normal banking channels.

The Ministry of Electronics and Information Technology (MEITY) will make sure that only the "Whitelist" Apps are hosted on App Stores like the Google Play Store or Apple Store while the RBI creates the white list.

According to a press release from the government, "The Finance Minister expressed concern on increasing instances of illegal loan apps offering loans/micro credits, especially to vulnerable and low-income group people, at exorbitantly high interest rates and processing/hidden charges, and predatory recovery practises involving blackmailing, criminal intimidation, etc."

The danger of money laundering, tax evasion, privacy violations, and the abuse of unregulated payment aggregators, shell firms, failed NBFCs, etc. for carrying out such activities were also mentioned by FM Sitharaman.

It was resolved in the meeting that the RBI would create the whitelist after extensive discussion of the legal, procedural, and technical aspects of the problem. The central bank will also keep an eye on accounts known as "mules" or "rented" that might be used for money laundering, and it will examine or close dormant NBFCs to prevent abuse.

Additionally, it has been requested of the RBI that no unregistered payment aggregators be permitted to operate once a certain period of time has passed without registration of those entities. To stop their exploitation, the ministry of corporate affairs will identify shell businesses and deregister them.

The government recommended that actions be done to improve customer, bank employee, law enforcement agency, and other stakeholders' cyber awareness. The operation of such illicit lending apps has been forbidden, and all ministries and agencies have been asked to take all reasonable precautions According to the statement, the finance ministry would routinely check the actionable items for compliance.

The government has already started conducting massive raids and searches in Bengaluru, Hyderabad, and Gurugram as a result of a News18 investigative series on the Chinese loan app scam, which involved up to 1,000 illegal companies operating in India and trapped many needy and innocent people in a vicious debt.

According to a senior government official who spoke to News18, the corporate affairs ministry seized the businesses, including those that assisted Chinese entrepreneurs in setting up fictitious Indian corporations.

Sources also stated that the home ministry will soon launch a campaign to inform the public about bogus Chinese lending applications. The ministry is also reportedly planning to write a letter requesting that all states take the necessary action against these apps.